Fannie, Freddie spent $200M to buy influence

If you want to know how Fannie Mae and Freddie Mac have survived scandal and crisis, consider this: Over the past decade, they have spent nearly $200 million on lobbying and campaign contributions.

But the political tentacles of the mortgage giants extend far beyond their checkbooks.

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The two government-chartered companies run a highly sophisticated lobbying operation, with deep-pocketed lobbyists in Washington and scores of local Fannie- and Freddie-sponsored homeowner groups ready to pressure lawmakers back home.

They’ve stacked their payrolls with top Washington power brokers of all political stripes, including Republican John McCain’s presidential campaign manager, Rick Davis; Democrat Barack Obama’s original vice presidential vetter, Jim Johnson; and scores of others now working for the two rivals for the White House.

Fannie and Freddie’s aggressive political maneuvering has helped stave off increased regulation and preserve special benefits such as exemption from state and local income taxes and the ability to borrow at low rates.

When their stock prices took a dive last week, their government allies extended another helping hand with a plan for the Treasury Department, the Federal Reserve and, possibly, Congress to shore up the companies.

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The housing crisis is sure to linger into the next administration, when the mortgage companies will inevitably be well-represented — no matter who’s in the White House.

Fannie and Freddie’s political contacts exist deep in the two presidential campaigns.

At least 20 McCain fundraisers have lobbied on behalf of Fannie Mae and Freddie Mac, netting at least $12.3 million in fees over the past nine years.

Political insiders Arthur B. Culvahouse Jr., picked by McCain to vet his vice presidential nominees, and Jim Johnson, picked by Obama to perform the same function, once worked for the mortgage giants.

And for years, Rick Davis served as president of an advocacy group led by Fannie Mae and Freddie Mac that defended the two companies against increased regulation.

So far this election cycle, Freddie Mac’s political action committee and employees have contributed $555,567 to Senate and House candidates, and Fannie Mae’s PAC and employees have given more than $1.1 million, according to the Center for Responsive Politics.

In total, the two companies have spent $170 million on lobbying over the past decade, according to the Center, although they have scaled back in recent years. Last year, they paid $14.1 million in lobbying fees, a significant decrease from a high of more than $26 million in 2004. The connections of both campaigns to the well-entrenched mortgage companies highlight the difficulties the candidates face in selling voters on an outsider message.

McCain’s campaign denied that its political connections have affected his view on the issue.

“I have written every word that has to do with Fannie and Freddie in this campaign, and I don’t know who the people are that are linked to the companies,” said McCain’s economic adviser, Douglas Holtz-Eakin.

McCain has called the government’s weekend intervention in the struggling companies “correct,” saying he hoped that the action would “preserve the ability of Americans to obtain loans in order to buy a home and be able to afford mortgage payments they’re having to make.”